Post on 13-Oct-2020
Pay For Delay
How Drug Companies Collude
to Keep Generics Off the
Market
Jayne A. Goldstein
Hatch-Waxman Act
Established in 1984
Purpose was to enable generic drug companies to bring cheaper versions of brand drugs to the market while recognizing the investment in R&D by the brand company
Before Hatch-Waxman generics could not obtain FDA approval without repeating expensive clinical trials that brand companies had already performed
Generics are Cheaper than Brand drugs
A generic drug is typically 20% to 90% less expensive than
the brand name original.
Generics Promote Competition
Competition from generic rivals forces brand drugs to reduce their own prices
after — or even before— patent expiration
Graph shows antiretroviral drugs, used to treat HIV before and after generic
Source: libertatianstandard.com
Reaction of Brand Companies Since
Hatch-Waxman – U.S R&D
Source: Compiled by PRIME Institute, U of Minnesota, based
on data in PhRMA Annual Survey 1998.
Brand Company Files NDA With FDA
To come to market a Brand Company files a New Drug Application (“NDA”)
FDA Determines:
Whether the drug is safe and effective in its proposed use(s), and whether the
benefits of the drug outweigh the risks.
Whether the drug's proposed labeling (package insert) is appropriate, and what it
should contain.
Whether the methods used in manufacturing the drug and the controls used to
maintain the drug's quality are adequate to preserve the drug's identity, strength,
quality, and purity.
Generic Files ANDA With FDA
To come to market a Generic Company files a Abbreviated New Drug
Application (“ANDA”).
Abbreviated
Not required to include preclinical (animal) and clinical (human) data to establish
safety and effectiveness.
Instead, generic applicants must scientifically demonstrate that their product is
bioequivalent (i.e., performs in the same manner as the innovator drug).
Difference Between NDA and ANDA
Source: ushpharmacist.com
Hatch-Waxman Requirement – Provide
Patent
Brand company must provide the patent number and the expiration date of
any patent which claims the drug for which the applicant submitted the
application or which claims a method of using such drug and with respect to
which a claim of patent infringement could reasonably be asserted if a person
not licensed by the owner engaged in the manufacture, use, or sale of the
drug.
Orange Book
FDA Publishes a list of all FDA-approved drugs
Each drug listing lists all patents Brand company has identified in the NDA
Designed to allow generic companies to identify drugs eligible for abbreviated
NDAs and certain types of patents relating to those drugs.
List of Approved Drugs is called the “Orange Book”
ANDA Filing Requirements
In its ANDA filing, the generic manufacturer must refer to a drug listed in the
Orange Book.
Generic manufacturer must include information to show that:
(1) the generic drug has the same route of administration, dosage form and
strength as the brand drug; and
(2) the generic drug’s labeling will be the same as the labeling of the brand drug.
ANDA – Certification against Patents in
Orange Book
As part of the ANDA, generic manufacturers are required to file one of the
following four certifications for each patent listed in the Orange Book relating
to the listed drug:
(I) patent information has not been filed with FDA;
(II) the patent has expired;
(III) the date that a relevant patent will expire; or
(IV) the patent is invalid or will not be infringed by the manufacture, use, or sale
of the generic drug for which the application is submitted.
Paragraph IV Certification
Most common certification
Generic must send a detailed letter notifying the brand
company why they believe their product will not infringe
the patent or why the patent is invalid
Patent Infringement Lawsuit
After receiving notice, the NDA holder has 45 days to bring
a patent infringement action against the ANDA applicant.
If the NDA Holder brings a patent infringement action
against the ANDA applicant the FDA may not approve the
ANDA for 30 months from the date of the receipt of
the notice or if a court rules that the patent is invalid or
not infringed the FDA may approve the ANDA.
1st Generic to file ANDA
Receives 180 day market exclusivity, once approved by
FDA
Brand Company is allowed to compete with Generic by
creating an Authorized Generic
Settlement of Patent Lawsuit
The majority of the time the patent infringement lawsuit
settles just as the 30 month stay is set to expire.
Reverse Payment
Patent Holder agrees to make a payment to potential
competitors who have threatened to enter the market
and challenge the patent holders' right to the patent,
thereby delaying the point at which the competitor enters
the market.
Reverse Payment - payment moves in the opposite
direction compared to what would ordinarily be expected
in a lawsuit (here the patent holder who is plaintiff in
lawsuit pays the potential infringer to “settle” the patent
litigation and not enter the market).
Appellate Court Split – Reverse Payment
Prior to June 2013
Some Courts Said – Absolutely Illegal Under Antitrust Laws
Antitrust Law can pierce shield of Patent Law
Other Courts Said – Legal if Within Scope of the Patent
Prioritized Patent Law over Antitrust Law
FTC v. Actavis
June 2013
The Supreme Court rejected the “scope of the patent
test”
Antitrust Law - “Rule of Reason” Analysis can pierce the
shield of patent rights
Rule of Reason Analysis
The "rule of reason" test has three parts:
The plaintiff must show that the challenged conduct has
produced anti-competitive effects within the market. If yes, then:
Defendant must show that the challenged conduct promotes a
sufficiently pro-competitive objective.
The plaintiff can rebut defendant's pro-competitive justification
by showing that the restraint is not reasonably necessary to
achieve the pro-competitive objective.
Supreme Court advised that: Courts should look at the size of the
payment
Recent Litigation
Since Actavis, there has been a flurry of litigation by
Direct Purchasers, Third Party Payors and Consumers to
recover for overcharges.
What Can You Do?
Get involved with Litigation
File claims when litigation is successful